The NDA government recalled 500- and 1,000-rupee notes last November, wiping out 86% of the money in circulation. PM Modi said the exercise was a war against black money and corruption.

In this file photo, lawyers can be seen outside the Supreme Court. The government has told the court that it can’t give more time to deposit banned currency. (Livemint Photo)

The government told the Supreme Court on Monday that people cannot be given another chance to deposit old currency notes that were demonetised in November, warning that a new exchange window suggested by the top court would defeat the purpose of the exercise.

Prime Minister Narendra Modi had on November 8 announced in a surprise television broadcast that banknotes of Rs 500 and Rs 1,000 denominations would cease to be valid the following day, wiping out an estimated 86% of the cash in circulation. People had till December 30, 2016 to deposit their old notes in their accounts.

“That it is most respectfully submitted that the very object of demonetisation and elimination of black money will be defeated if a window is opened for a further period as the persons in possession of the specified bank notes (SBNs) would have had sufficient time and opportunity to carefully plan the reasons and excuses for not depositing the SBNs within the permitted period,” a government affidavit to the top court said.

The November exercise, meant to purge cash hoarded as black money, triggered unprecedented rush at banks, and the government’s rivals accused it of harassing the people by mismanaging the exercise.

“Any number of benami transactions and user proxies for the purpose of producing and depositing SBNs would then arise which the departments would have great difficulty in deciding any genuine case from the numerous bogus ones,” the government said to the SC, which asked the government to open another window for those who had legitimate reasons for not depositing the old notes before the deadline.

The top court is hearing petitions filed by those who were denied permission by the Reserve Bank of India to deposit their money after the deadline.

During the last hearing, the Chief Justice of India asked the government to consider giving some more time to people who were unable to visit banks for depositing money due to genuine reasons. It had warned the government against issuing orders if it did not do so.

“What if someone is terminally ill and could not deposit the money. If someone has a genuine reason, you cannot deny him the opportunity to deposit the money. You cannot be allowed to deprive a person of his money,” a bench headed by Chief Justice JS Khehar had told solicitor general Ranjit Kumar.

According to the petitioners, the Prime Minister had in his speech on November 8, 2016 assured that old currency would be accepted at select RBI outlets till March 31, 2017. But an ordinance was brought in that declared possession of old notes illegal, which the government said was done to plug the malpractices and irregularities noticed during the first three weeks after demonetisation.

There was unusual spurt of cash sales – without PAN in most cases - immediately after the announcement. Bills were split to hide identity of purchasers; sales were backdated; receipts were shown for advance payments on future sale, the government said in its affidavit to detail some of the ways in which people attempted to pass off illicit cash.

The affidavit cited specific instances of how money was allegedly laundered and routed through accounts of shell companies and was layered through ‘intermediary’ accounts before being received in accounts of bullion traders.

These, the government said, forced the government to cancel or restrict exemptions granted.

As a result of the raids and other strict measures enforced, more than Rs 610 crore in cash (Rs 513 crore in old notes) and valuables were seized by the IT Department and other government agencies.

The undisclosed income detected in the above actions was of more than Rs 5,400 crore, the government said.